1.Exclusion of capital gain on
sales and exchanges of homes purchased in a foreclosure sale
(a)Part I of subchapter
P of chapter 1 of the Internal Revenue Code of 1986 (relating to treatment of
capital gains) is amended by adding at the end the following new
section:
1203.Gain on sales
and exchanges of homes purchased in a foreclosure sale
(a)Gross income shall
not include qualified gain.
(b)For purposes of
subsection (a), the term qualified gain means any gain from the
sale or exchange of any qualified residential property which is acquired after
the date of the enactment of this section, as the result of having bid on such
property at foreclosure, or by operation of an agreement or process of law,
after there was a default (or a default was imminent) on indebtedness which
such property secured.
(c)Qualified
residential propertyFor purposes of this section, the term
qualified residential property means a residential property
which—
(1)is a capital
asset,
(2)is located in the
United States, and
(3)consists of from 1
to 4 dwelling units.
(d)The basis of any
qualified residential property shall be reduced by the amount of any exclusion
determined under this section with respect to such property.
(e)Subsection
(a) shall not to sales and exchanges after the end of the 18-month period
beginning on the date of the enactment of this
section.
.
(b)Section
1016(a) of such Code is amended by striking and
at the end of
paragraph (36), by striking the period at the end of paragraph (37) and
inserting , and
, and by adding at the end the following new
paragraph:
(38)to the extent provided in section
1203(d).
.
(c)The table of
sections for part I of subchapter P of chapter 1 of such Code is amended by
adding at the end the following new item:
Sec. 1203. Gain on sales and exchanges of homes purchased in a
foreclosure
sale.
.
(d)The amendments made by
this section shall apply with respect to property purchased on or after the
date of the enactment of this Act.